There has been much research in this area and here are some recent findings: According to Bain & Company, increasing customer retention rates by just 5% can boost profits by 25-95%.
Epsilon found that 80% of consumers are more likely to make a purchase when brands offer personalised experiences; McKinsey reports that companies effectively using data-driven personalisation see 5-8 times the return on investment on their marketing efforts and a 10% or higher lift in sales.
Clearly, strategic loyalty initiatives are critical in driving both customer satisfaction and bottom-line growth. However, many consumer behaviour patterns have changed post the pandemic. The game is getting tougher for retention for companies lacking fresh insights into shopper expectations.
What do shoppers seek from retailers in exchange for their loyalty? The findings from various research can be coalesced around three pivotal themes:
Ease of doing business: In the digital marketplace, convenience reigns supreme. The recent strategic shift to Q-com or quick commerce emerged from this insight. Deliveries within short time spans were pioneered by Zepto, and most e-commerce platforms quickly followed suit. Swiggy focused on the Q-com segment for grocery delivery, making it a highlight of its operation before its recent initial public offering.
Consumers are not just shopping. They are seeking seamless, intuitive experiences that make it easy to discover and purchase products. For younger shoppers, this expectation is even more pronounced.
Personalisation might be a good way to address this. By leveraging data on browsing and purchase histories, retailers can craft tailored recommendations that not only appeal to individual customers but also encourage repeat purchases.
Algorithms driving “people like you buy” recommendations are particularly effective. These systems analyse a customer’s purchase history in relation to others, offering highly relevant suggestions based on collective preferences.
Moreover, integrating advanced search tools, predictive filters and curated shopping guides can amplify the ease factor, transforming routine browsing into a discovery-driven experience.
Marketing content can create relevant connections: Effective content, and its delivery, is the glue that binds a customer to a brand. Studies show that one in four shoppers express a strong preference for triggered notifications, particularly back-in-stock, new arrivals, all-day-low-prices and price-drop alerts.
For customers, few things are as frustrating as finding a product out of stock. This explains why customers suddenly drop off on the platform after filling their carts with items. They probably migrate to another online retailer that has all the items they want.
This disappointment can be turned into an opportunity. Timely back-in-stock messages that leverage browsing data provide a seamless way to keep customers engaged. Including details such as product images, pricing, discounts and a clear call-to-action ensures these notifications hit the mark. Speed is crucial. Alerts that arrive too late risk losing the customer to a competitor.
Similarly, price-drop alerts and all-day-low-prices notifications cater to the shopper’s innate desire for value. A tailored message informing a customer that an item previously browsed is now available on discount adds a layer of thoughtful service.
Together, such missives serve as more than transactional updates. They are touchpoints that reinforce the retailer’s commitment to delivering value and staying attuned to customer needs.
Shopper incentives: Loyalty is a two-way street. But in many businesses, it is mostly calibrated against money spent by customers. Customers expect tangible and intangible rewards for their continued patronage, and savvy retailers should know how to meet this expectation.
According to one survey, almost 32% of loyal customers desire early access to sales or limited-edition products. This exclusivity can be a powerful tool for deepening loyalty. By segmenting their shoppers, retailers can offer repeat customers first dibs on discounts, limited releases, or new arrivals, creating a sense of privilege and belonging.
Additionally, a growing number of younger consumers are willing to participate in user-generated content initiatives in exchange for incentives. Nearly 26% of customers aged 16-24 are open to sharing photos, reviews or testimonials on social media in return for perks.
Online retailers can capitalize on this trend by running campaigns that reward creativity with discounts, vouchers, or exclusive experiences. Communicating the details of such programmes in post-purchase messages—complete with guidelines, hashtags and submission processes—ensures maximum participation.
The loyalty stakes have never been higher. With the rise of e-commerce giants and an increasingly fragmented retail sector, competition to secure and retain customers is fierce. Success requires more than superficial strategies. It demands an investment in technology, analytics and research.
Retailers must keep pace with expectations as they evolve. Sustainability, for example, is emerging as a loyalty driver, with shoppers gravitating toward brands that align with their ethical values.
Offering eco-friendly packaging, highlighting sustainable product lines, or supporting community causes can help connect with today’s conscientious consumers.
Ultimately, the brands that succeed will be those that view loyalty not as a short-term tactic but as a long-term investment.
With the right approach, retaining customers becomes less about discounts and more about building trust, driving engagement and delivering value at every touchpoint.
In the race for loyalty, it’s not about who shouts the loudest. It’s about who listens the best.
The author is a Fortune-500 advisor, start-up investor and co-founder of the non-profit Medici Institute for Innovation. @MuneerMuh
